Founder and CEO of hedge fund Citadel, Ken Griffin, warned that the global economy is at risk amid the conflict in the Middle East.
In an interview at the Semaphore Global Economy Summit in Washington, D.C., Griffin said He says The Iran war has created an “energy crisis” that could seriously harm the global economy.
“It (the energy crisis) will of course destroy demand. It will cause economies around the world to slow down. The risk of recession has increased and central banks are making some really tough decisions. Will the inflationary spike this creates see it as transitory and leave monetary policy as is? Or will they see themselves as having to raise interest rates to try to keep inflation expectations anchored?”
So this is really a very treacherous moment for the global economy as we deal with the consequences of trying to secure lasting peace in the Middle East.
Griffin says that if the Strait of Hormuz, which Iran closed by threatening ships sailing through it after the United States and Israel launched a war against it, remains unnavigable in the coming months,
“I mean, let’s say it’s going to be shut down for 6 to 12 months. The world will end up in recession. There’s no way to avoid that.”
However, Griffin says the continued contraction in crude oil and natural gas supplies as a result of the Iran war could boost alternative energy sources.
“We will see a rapid shift toward alternative fuel sources. We will see wind. We will see nuclear. We will see solar. We will see massive efforts to reduce dependence on fossil fuels. But that is measured in years, not months. So, we will see an acceleration of some of the historical trends that have emerged over the past 10 years as the world quickly tries to move away from fossil fuels if we lose a reliable fuel source, which is the Middle East.”
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